'Financial engineering' to curb emissions will be key, U.N. official says

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BONN, Germany — A tax on airline tickets and an auction of pollution rights are just two ideas likely to be studied at a 162-nation conference examining ways of raising the billions of dollars needed every year to fight global warming.

More than 2,000 delegates opened the two-week meeting Monday, launching an 18-month process of intense negotiations on an agreement to succeed the Kyoto Protocol, which expires in 2012.

Discussions began with a warning from poor countries and environmentalists that global warming already is harming millions of people, worsening the global food crisis and changing Earth more rapidly than scientists earlier predicted.

Climate change "for us is not a distant reality, but a present reality," said Amjad Abdulla of the Maldives, whose Indian Ocean island nation could vanish if sea levels rise just a few feet.

Recent cyclones that have battered Myanmar and Bangladesh "should be a wake-up call to all of us," he said, speaking for 49 nations grouped as Least Developed Countries.

The Bonn talks are to go into the details of an agreement to be concluded in December 2009 and signed in Copenhagen, Denmark. The talks are based on an accord reached in Bali last December when the United States, India and China indicated they would take part in a post-2012 arrangement.

"The critical issue will be financial engineering," said Yvo de Boer, the United Nations' top climate official.

"The developing countries made a major step forward by saying in Bali they are willing to take real, measurable and verifiable steps to limit their emissions — provided real, measurable and verifiable money is put on the table," he said.

The new climate change pact will succeed the first phase of the 1997 Kyoto Protocol, which requires 37 industrialized nations to reduce greenhouse gas emissions an average of 5 percent below 1990 levels by 2012.

The United States agreed to the Bali accord after several of its objections were met. It had signed but refused to ratify Kyoto, largely because rapidly developing economies like India and China faced no climate obligations.

At least seven more major meetings are scheduled before Copenhagen, with the next in August in Accra, Ghana. Delegates say the new pact must be concluded by December 2009 so it can be ratified in time to smoothly replace Kyoto in 2012.

Few, if any, conclusions were expected from the Bonn talks.

The most difficult issues have been put off until next year, when a new and presumably more climate-friendly administration takes over in Washington.

De Boer told The Associated Press on Sunday that by 2030 the world will need to spend $200 billion to $300 billion a year to contain global warming and help developing nations adapt to their changing conditions — such as less rainfall, harsher storms, and the extinction or migration of species.

Several delegations have brought proposals to Bonn for raising those funds.

Mexico wants to create a pool of regular donations from each country according to its financial means, which would be distributed to developing countries according to need.

The European Union and several small countries are working on proposals for a climate tax on aviation and shipping.

The growing carbon market could be a major source of revenue. In the EU, industries are allocated pollution rights allowing them to emit carbon dioxide and other greenhouse gases, which they can trade on the open market. Companies that do not use all their credits can sell them to others that have exceeded their pollution limits.

Many delegations, supported by environmentalists, say those emission credits should be auctioned rather than allocated for free. Damien Demailly, of the environmental group WWF France, estimated such auctions could raise $40 billion annually.

De Boer has floated an idea to create a climate change bond that would be sold by developing countries to investors. The bond issue would evolve from the current system under which countries gain credit for projects they finance in another country that can verifiably reduce that country's carbon emissions.

Scientists warn the world's carbon emissions must peak within the next 10 to 15 years and then fall by half by mid-century to avert potentially catastrophic consequences.

Bill Hare, a scientist for the Greenpeace environmental group, said in the half year since Bali, a grimmer scientific picture has emerged regarding global warming. New reports say ice is melting at a record rate in Greenland and Antarctica, he said, and droughts in Australia, Ukraine and Russia have cut into food production.

"The negotiators here are gathering under a darkening cloud," Hare said. "The level of ambition is far too low."

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